In industries where creativity fuels business value — from design and software to publishing and entertainment — protecting intellectual property (IP) is critical. When disputes arise between employers and employees over ownership or use of IP, settlement agreements often offer a confidential and structured way to resolve matters.

Engaging experienced settlement agreement solicitors ensures terms are fair, enforceable, and aligned with UK law.

In this article, we examine how IP considerations intersect with employment law and explore the role of confidentiality clauses in IP-related settlement agreements.

The Role of Settlement Agreements in Employment Disputes

Settlement agreements are legally binding documents used to resolve disputes between employers and employees, usually at the point of termination. These agreements can cover a range of issues including:

  • Severance payments
  • Non-disparagement clauses
  • References
  • Waiver of claims under employment law

In creative sectors, they often include specific provisions related to intellectual property — particularly when an employee has created original content, software, or designs during their time with the company.

The Advisory, Conciliation and Arbitration Service (ACAS) provides clear guidance on the use and legal status of settlement agreements in the UK.

Understanding Intellectual Property in Employment

In the UK, IP created by an employee in the course of their normal duties generally belongs to the employer. However, disputes can arise over the definition of “normal duties,” especially in startups or fluid working environments where roles may evolve informally.

To avoid ambiguity, employment contracts should include clauses addressing IP ownership. If these are absent or unclear, a departing employee might claim ongoing rights to work they developed.

This is where settlement agreements can offer clarity. They can explicitly transfer IP rights, reinforce existing arrangements, or license work back to the employee under defined conditions.

For more detailed information on IP rights in the workplace, the Intellectual Property Office outlines best practices for employers and creators.

Confidentiality Clauses: Safeguarding Creative Assets

A key feature of many settlement agreements is the confidentiality clause. In an IP context, this clause helps:

  • Protect trade secrets and commercially sensitive ideas
  • Prevent unauthorised use or distribution of creative content
  • Shield the terms of the settlement from public or competitor scrutiny

Confidentiality clauses should be specific and proportionate. They must identify the type of information protected, duration of the confidentiality, and the consequences of breach. The Information Commissioner’s Office (ICO) offers guidance on handling personal and sensitive data in an employment setting.

Employers must also ensure these clauses don’t infringe on employees’ statutory rights — such as reporting criminal wrongdoing or whistleblowing, which are protected by law.

Negotiating Fair Terms for Both Parties

A fair settlement agreement considers the interests of both the employer and the employee. For employees, this might include:

  • Retaining portfolio rights for creative samples
  • Non-exclusive licences to use work they’ve produced
  • A clean break without future legal action

Employers, meanwhile, may want guarantees that all IP created during the contract is fully assigned and that the departing staff member will not disclose or repurpose proprietary ideas.

A solicitor specialising in employment law can ensure all terms are legally sound and that negotiations reflect the value of the creative output in question.

When to Use an IP Settlement Agreement

Common situations where IP settlement agreements are valuable include:

  • Redundancy processes involving creative employees
  • Disputes over authorship or project ownership
  • Concerns about former staff joining competitors with proprietary knowledge

They are also used proactively, such as when staff leave amicably but still need to sign off on IP transfer for products or campaigns developed close to their departure.

Mitigating Future Risk Through Strong Contracts

While settlement agreements are useful tools, the best approach is prevention. Clear, comprehensive employment contracts reduce the risk of IP disputes arising. These should include:

  • Defined ownership of IP created during work
  • Terms around use of personal creative tools or portfolios
  • Obligations to return physical or digital assets

Regularly reviewing contract templates and updating them to reflect changes in your business or technology can also help you stay ahead of potential problems.

Startups and SMEs should take particular care, as informal work cultures can sometimes overlook formal documentation. As businesses scale, such omissions become costlier and harder to resolve.

Preserving Creative Rights with Confidence

In sectors where innovation is a business’s lifeblood, intellectual property must be protected through thoughtful agreements. Whether resolving a dispute or preventing one, settlement agreements provide structure, clarity, and confidentiality.

By negotiating fair terms, addressing IP concerns directly, and ensuring both parties are informed, businesses can preserve what makes them unique — their ideas.

This article is intended for informational purposes only and should not be treated as legal advice. For guidance on settlement agreements or IP in employment, individuals should consult a qualified legal professional.